A. the RECORD DEMONSTRATES THAT AMIDST TEE EXPLOSION of MEDIA, TEE RULE PREJUDICES NEWSPAPERS - TEE MEDIUM MOST COMMI’Lted to LOCAL NEWS

Home , Channel 61 (New Zealand), Chicagoland Television, WNCN

a. THE RECORD DEMONSTRATES THAT AMIDST TEE EXPLOSION OF MEDIA, TEE RULE PREJUDICES NEWSPAPERS - TEE MEDIUM MOST COMMI’lTED TO LOCAL NEWS.

A. The Media Marketplace Bas Experienced Dramatic Growth, Rendering Traditional Media Vulnerable To New Competitors.

Advocates for retention of the Rule and those favoring its repeal agree the number of media outlets in communities across the nation has exploded since the Rule’s adoption The

Commission makes note of this fact in the Notice and media owners in markets large and small provide substantial data describing the increases in programming diversity and competition that have occurred since 1975 .=

All of the commentary and data also concur that newspaper circulation and television ratings have suffered significant declines as a result of the emergence of new media competition, principally from cabldsatellite and the Internet.” Today, cable competes for and wins a significant share of the most popular programming available.” Using its dual revenue streams, cable can simply outspend over-the-air broadcasters for key programming. For example. in January 2002 the National Basketball Association signed $4.6 billion rights agreements with

Disney (ESPN,ABC) and AOL Time Warner (TNT). In an historic shift, ABC will air only 15 regular season games plus five early-round playoff games and the NBA Finals. All other games,

:‘ See. e.g.. CommcnU of New Yo* TimCompany at 2-7; Commenu of &lo Cop. at 8-9 Comments of Moms Communications Corporation at 16-23; Commcnls of The Hcam Corporation at 5-12 Comments of The Media Institute at 5.6; and nunmuus ochus. Defenders of the Rule focus on consolidation of ownership, but ah! that as measured by the numbex ofvoices. public discourse is more robust today that it was when !he Rule was adopted. See. e.g.. Comments of The office of Communication, Inc. of The United Church of Chris Nauonal Organization for Women and Media Alliance (colleaively “United Church of Christ. et. al“), at 4 (showing growth in number of ..radio StatlOnS). .’ See. e.g., Kathy Bergen, TV ncws’ sacred statu now old story, Chi. Trib.. feb. IO. 2002, Business at I ia In coverage of news in gencral. and America’s War on Terrorism in parlicular, more and more Amencans are turntng to cable networks instcad of mer-the& stations. $e. c.g., Mark Jurkowitz. In TV news, this is way. Nclworks mav k losing !he battle as more viewers nun IO cable countemans, Chi. Trib., Des. 18.2001. Tempo at Continued) including the All-star game and conference finals, will be chedexclusively on ESPN, TNT and a newly-formed cable channel owned jointly by the NBA and AOL Time Warner. Following the trend of Major League Baseball, the NBA recognized “the difference in distribution is dwindling

From broadcast to cable. For anyone truly interested in watching these games, they won’t be difficult to find.””

As the Commission acknowledged last month, viewers are following the programming to cable or another form of multichannel video programming delivery service

(“MVF‘D) In January, the Commission announced pay TV subscribers jumped 4 6% in the year ending June, 2001, with growth in satellite service outpacing cable by more than double.” More than 88 million U.S. households subscribe to some MVPD and the broadband audience has surpassed 2 I million.” Cabldsatellite subscriptions in many communities approximate total coverage. In Hartford, Connecticut, more than 88% of television viewers subscribe to cable or another MVPD, making any discussion of the over-thcair television marketplace a hypothetical exercise. Internet sites provide additional competition without providing local news.I2 And as the

Commission’s January report suggests, these trends will continue

3 Ed Sherman, Cable snares Wafgames; ABC joins ESPN. TMin +age, Chi. Tnb.. Jan. 23,2002. Sporfs at 7. quoung ESPNs George Bodenheimer (ESPN and TNT were able to pay the NBA 25% more than the incumbent broadcasr nmrkNBC in the 2002 pact. “The NBA had to go the cable mute in order Io generate the increase NBC came in with a substantially lower bid after claiming it lost 5300 nullion during the last two seasons of the mntdeal.”). See also, Stefan Fatsis, Broadcast Bounce: NBA’s Pact With AOL. Disnev Puts Most Games in Cable’s Cow&Wall SI. J., Dcc. 17. 2001, 5 Bat6 lo Annual Assessment of the Slatus of Commtition in the Market for the Deliverv of Video Pmmamrm‘ng (CS Docket 01-129) Jan. 14.2002, at 7 6. See olso. Raters. Pav television rubwnkr numbers UD 4.6% - FCC, Jan. 14.2002 ” Niclxn/NetRatings. Broadband audience sumasxs 21 million in November. wninn a record hi&. accordrnn 19 Nielsen NetRatina, (Nov. 2001).

It Diversity and camptition, the hvo principles supporting the Rule. may actually katodds in today’s media Gmrmucd)

12 B. Rising Newsgathering Costs Jeopardize Viewpoint Diversity And Cross- Ownership Provides A Remedy.

Both sides of the debate acknowledge the cost of producing a unique television newscast has escalated dramatically since the Rule’s adoption.33 Those supponing the Rule lament “the dramatic decline in the rate at which TV stations have news operation^."^^ It is also noted that some stations now opt to “outsource” their newscasts or use pooled news services, all of which lead to content homogenization.” Ironically, these maladies have occurred since the

Rule was adopted and cross-ownership banned. In fact, Tribune’s comments offer a candid example of this economics of news dilemma and illustrate how cross-ownership is the remedy to this phen~menon.’~

Tribune’s comments describe its interest in launching a new newscast in South

Florida. There, Tribune owns both the news-rich Sun-Sentinel newspaper and the seventh-rated television station, WBZL. Mer acquiring WBZL in 1996 as part of a six-station transaction,

Tribune sought a permanent waiver of the cross-ownership rule, but agreed to a temporary waiver that prohibited sharing of news resources, even though WBZL did not produce a newscast at that time. In effect, the terms of the waiver extinguished the possibility WBZL could launch a new newscast using the resources of the Sun-Senhnel. Instead, WBZL has opted for the financially marketplace. For instance. dassified advertising -amajor revenue source for newspapen - is king eroded by online competitors such as Monner.com, Autobytcl and Homehunter.com. Advocates of the Rule adnut Ihese new media operations do not sigrulicanlly convltute to the marketplace for local news. That is. they do not measurably contnbute to diversity of local voices. However, such entities clearly add to the comp*ltion facing newspapen. They take revenue and the resulting financial impact on newspapen merely advantages thae cornparues that do not inform the public or add to the marlcetplacc of ideas. 13 See. c.g.,Comments of Consumen Union, et. al, at 80. See olso, Kathy Bergen. TV news’ sacred slatus now old m,Cht. Trib. Feb. 10,2002. Businus at 1. ’‘ Comments of Consumen union. et. ai, at 80. Id. at 57-58.

13 prudent carriage of a newscast produced by a competing television station in the market and viewers in South Ronda are deprived of an independent television newscast,

C. The Rule Is Biased Against Newspapers. None of the comments deny newspapers play an important role in informing our citizenry and are committed to covering news at the local level.” The record also demonstrates how broadcast stations under common ownership with a newspaper produce significantly more

IOC~Inews3*

Yet while both sides agree on the importance of newspapers to an informed public, advocates of the Rule’s retention reach the incongruous conclusion that diversity and the quality of news coverage will improve if the Commission continues to deny broadcast ownership to enterprises that by their nature are the most committed to local news. If this were true, one might expect greater quality local coverage in markets without grandfathered combinations. But there is no evidence of such, in this record or othenvise. For example, proponents of the Rule do not claim that Washington, D.C.,with no remaining grandfathered combinations, has better local news coverage or diversity because of it, than does Chicago, New York, Atlanta, Dallas or Los

Angeles

Nor do they claim - because they cannot - that lack of diversity is a major problem

with local news. As demonstrated in the filings of Tribune, Gannett Co., Inc , The New York

16 Comments of Triburs Company at 43.49-50. 37 See supra note 1. See also. Comments of Consumers Union, et. al, at 61-62 C‘Telcvision does not perform the same function as newspapers and neither rcplafn radio. Broadcast docs not compete effectively with newspapers in the new function. Newspapers pmvidc a di&rcnt type of information service with differtnt impact . . . rhan video or radio, with much longer and in dcpth treatment of issues. In this they have adopted to a role distinct fmm television.’’).

14 Times Company, The Hearst Corporation, Moms Communications Corporation, Belo Corp., Cox

Enterprises, Inc., E.W. Scripps Company, and others, common ownership actually increases the amount, quality and viewpoint diversity of local news and public &airs programming. Common ownership spurs broader local television news coverage over the air in the same way it has given birth to local all-news cable channels, such as ChicagoLand Television News.

Those who oppose any change to the Rule would do well to remember that the goal of the Rule is not to prohibit newspaper publishers from owning television stations, but to increase the diversity of voices and the level of local news in the marketplace - a goal that is impaired by this timeworn regulation.

III. OUTDATED THEORIES OF SOURCE DIVERSITY ARE NOT SUPPORTED BY THE RECORD. Proponents of the Rule today base their arguments on hyperbole and hypothesis, rather than facts. They have adopted new names for the theories propounded in the past, such as

“Empirical Concept of Diver~ity”’~and “institutional diversity”,” however, at their essence, these theories simply restate the aged source diversity theory that launched the Rule in 1975 4’ Offering no basis in fact or experience, these theories allege that increasing the number of broadcast station owners necessarily yields diverse viewpoints, while concentrated ownership results in viewpoint repetition.

Y See. e.g., Comments of Media General at I1 and Appcndix 5: see also, supra, nole 2. ’’ Comments of Consumerr Union et. al, at SO. “id. at 51. ‘‘ See. e.8.. id. at 53; Comments of the United Church of Chrid et. al. at 15.

15 The fallacy of the source diversity theory is demonstrated above and in Tnbune’s earlier comments. As described above, the economic realities of newsgathering have caused all news operations, whether independent or commonly owned with other newspapers or broadcast stations, to consider pooling news with competitors or outsourcing their news operation altogether In South Florida, for example, NE3C programs newscasts on three stations, including

Tribune’s WBZL, while CBS programs newscasts on two stations. Similarly, as demonstrated by the FCBJ article and Tribune’s comments, television stations and newspapers do not speak with one voice simply because they are commonly owned

News operations often expand in cross-owned markets” and other programming diversification occurs in search of new viewers. Recently, the trend toward more targeted programming took another step as Viacom announced it was exploring a gay-oriented TV channel for what the company called an “underserved audience niche.”43 Also last month, Univision launched a new network, Telefutura, with special appeal to bilingual audiences. These efforts underscore the incentive of major media companies to develop content that serves diverse communities. This stands in strong contrast to the allegation by those who support the Rule that larger media companies produce only homogeneous content.

What the proponents of the Rule seem to desire is a guaranteed outlet for evety view.” Some even suggest the resuscitation ofthe Fairness Doctrine, the Political Editorial Rule

For example, dapitc the large investigative sta€fat the Chicago Tribune, Tribune’s WGN-TV established a new investigative unit in July 2000. This unit pursues news investigation independent of the newspaper. *’ Asscciated Pres. Media mant may launch eav channel, Chi. Sun Times. Jan 15.2002. Features at 36. 4. See. e.g. Comments of Consumcn Union N. al, at 52 (“Under the First Amendment we can never tell people what to say, and we certainly cannot make them listen, but under the Communications Act and to serve our Constitutional principles we can organize the srmcrural rules of the industry to increase the probabilities that more people will engage in civic discourse.”).

16 and the Personal Attack Rule.” These theorists refuse to recognize that the American system entrusts the private sector with the role of qualifying viewpoints and leaves the marketplace as the guarantor of viewpoint diversity. In today’s multiple-media environment, with myriad sources and outlets for content, and varied and diverse consumer groups demanding news and information targeted to meet their needs and interests, the market will work. The elimination of the Rule will only facilitate a free market.

IV. THE LEGAL FRAMEWORK PROPOSED BY ADVOCATES OF THE RULE PERVERTS THE FIRST AMENDMENT AND IGNORES THE LIMITED CONSTITUTIONAL BASIS FOR NEWSPAPER/BROADCAST REGULATION.

Perhaps most troubling about the legal analysis asserted by those who would retain the Rule is the failure to address the evaporation of the scarcity doctrine - the now-obsolete premise of the Rule. The once limited (scarce) broadcast spectrum arguably heightened the need to preserve diversity among existing voices. In today’s marketplace, the concept of scarcity that supported the Rule is outdated. and the Supreme Court has hinted it would recognize as much in this media landscape.36 As new media and MVPDS dominate the landscape, the limitations of a scarce broadcast spectrum - the Constitutional linchpin for the Rule -have been eliminated.

Advocates for retention cite decades-old precedent, and rely on legal framework based on a media marketplace that no longer exists. They prop up scarcity around the edges - inaccurately claiming that the Internet does not attract viewers away from newspapers or

See Comments of Thc UNtcd Church of Christ at 20. * FCC v. Leaeue of Women Voten, 468 US. 364. 376 & n. 11, appeal dismissed, 468 U.S. 1205 (1984) (noting the scarcity rationale “has corn undcr increasing criticism in recent years” and highlighting those who argue the availability of cable and satellite television tetbnology mdcr the doanne “obsol~te”). See also. News Amc nca F’ublirhmn. Inc.. v. FCC, 844 F.2d 800. 81 I 0.C.Cir. 1988) (The Suprcm COW“ha5 mOgIUZd that neW technology may render the [mityl docwine obsolete - in- may have already done so.”).

17 broadcaster^.^' But they cannot challenge the facts that show more and more consumers get news and information from sources other than the dady newspaper and the local broadcast station.“ In short, the antiquated concept of scarcity is not defended because that scarcity no longer exm

The Constitution and the Telecommunications Act of 1996 squarely place the burden of persuasion on advocates of continued regulation. The Rule has been in place for 27 years, and conjecture, speculative gain and predictions of doom can no longer serve as its basis

More than a quarter century of facts and experience now demonstrate the impact of the Rule and the results of common ownership in grandfathered markets - and this evidence clearly shows that in today’s marketplace, common ownership does not harm diversity

“Where the agency applies [a general] policy in a particular situation, it must be prepared to support the policy just as if the policy statement had never been issued. An agency cannot escape its responsibility to present evidence and reasoning supporting its substantive rules by announcing binding precedent in the form of a general statement of p~licy.~’~~

Section 202(h) ofthe 1996 Telecommunications Act directs the Commission to review all its ownership rules biennially to determine if they “are necessary in the public interest as the result of

*1 See. e.g.. Commaus of Connuacrr Union. et al, at 9 1 See. Commenu 0fTribUoe Company. at 10 and 3 1-34 (demonstrating decline in rcadenhip and viewership of traditional media as new alternatives fragment the marketplace). Also. the mon reccnt study of online usage found that among thcsc who use the Intcrnct at work Internet usage exceeds nwspapr usage in evep daypan and exceeds all other mcdia except radio in the morning TV in the evening and magazrncs in the early evening (prc- prime Umc). in tcrms of time Spnl during variw daypans. &e. Online Publishers Association. Topline Summary. Media Consumplion Study, conducted by Millward Brown lntelliquest (Ian. 2.M)Z). available at wwwonline-publishcrs.org. ‘’ Bcchtel v. FCC, 957 F.2d 873.881 @.C. Cir. 1992). quoting Pacific Gas & El=. V. FPC, 506 F.2d 33, 38-39 (D.C.Cir. 1974). For a good dirussion of thir paint, see, Comments of the Newspapa Association of America at 89-92, citing 1998 Biennial Review Rcoort, IS FCC Rcd at 1 I151 (Separate Statement of Comm’r Michael K. Powcll).

18 competition.”J0 This law requires the Commission to “repeal or modify any regulation it determines to be no longer in the public interest.” Accordingly, the Commission must presume there is no need for regulation and justify any portion ofthe Rule it opts to retain. Absent evidence the cross-ownership rule is necessary to preserve competition and diversity, and is narrowly crafted to achieve those objectives, the Commission cannot maintain the Rule.

In Bechtel Y. FCC,the Court of Appeals concluded the Commission had an obligation to consider and explain whether its longstanding policy favoring integration of ownership and management in comparative licensing hearings was still in the public interest in light of other regulatory changes.” The Court said “it is settled law that an agency may be forced to reexamine its approach ‘if a significant factual predicate of a prior decision . . . has been removed‘.”’* The Commission, the Court noted, “should stand ready to alter its rule if necessary to serve the public interest more fUlly.”53

Those who oppose any change to the Rule ignore the law, cite to legal references that begin “in the abstract, . . .’’J4and wrongly conclude that in this proceeding the burden of proof is on those advocating unburdening the First Amendment. Even so, they do not contest that absent a compelling public interest or any facts that demonstrate a need for its restrictions. the Rule would fail. Here, there is IIO evidence the Rule is necessary or serves the public interest

and the Commission’s conclusion is self-evident.

HI Pub.L. 104-104 9 202(h), I10 Stat. 111-12 (19%).

j’ Bahtcl v. FCC. 951 F.2d at 881.

” Id. at 881. quoling WWHT. I~,6~FF2d807,[email protected]).

I’ Bechtcl v. FCC. 951 F.2d at 881, poling PCC v WNCN Listeners Guil& 450 US. 582.603 (1981) Comments of Consumers Union. et. al, at 23, citing Motor Vehicle Mfrs. Adoof U.S..IN. V. State FWI& 463 (continued)

19 V. CONCLUSION: TOTAL ELIMINATION OF TEE RULE IS THE ONLY OUTCOME JUSTIFIED BY THE RECORD. The Commission adopted the Rule more than a quarter century ago in the face of an impressive and consistent record of newspaper publishers’ civic-minded stewardship of broadcast stations. As in 1975, the facts in this proceeding support the benefits of allowing newspaper publishers to own radio and television stations. The evidence is uncontroverted: common ownership means more news, more local coverage and nothing in the record suggests commonly-owned markets practice viewpoint constriction, suppression or censorship.

Since 1975, the information marketplace has exploded and diversified, and the world has changed. Now it is time for the Rule to change. The 1996 Act was adopted to expunge this regulatory relic, and in a system where individuals and private entities are allowed freedom of speech, that Freedom ought not differentiate among merely because one might own a printing press. Absent decisive Commission action, the Cows will provide a remedy, as it is all but conceded that the Rule will not pass Constitutional muster in the 21st

Century

U.S. 29 (1983).

20 For the foregoing reasons, Tribune asks the Commission to eliminate the Rule in its entirety. Tribune adopts and incorporates the comments ofthe Newspaper Association of

America and the National Association of Broadcasters, among many others advocating elimination of the Rule

RespectfirUy submitted,

TRIBUNE COMPANY

Charles J. Sennet Tribune Company 435 N. Michigan Avenue Chicago, Illinois (312) 222-9100

R. Clark Wadlow Mark D. Schneider Sidley Austin Brown & Wood LLP 1501 K Street, N.W. Washington. D C. 20005 (202) 736-8215 Its Attorneys

Dated: Februaq 15,2002

21 Attachment B RECEl VED Before the

Federal- ~~ Communications Commission JAN - ;S Ifif12 Washington, D.C. 20554

) In the Matter of ) Cross-Ownership of Broadcast Stations ) MM Docket No. 01-235 And Newspapers ) ) MM Docket No. 96197 Newspaper/Radio Cross-Ownership ) Waiver Policy. 1

COMMENTS OF TRIBUNE COMPANY

Crane H. Kenney Michael R. LufranO Charles J. Sennet Tribune Company 435 N. Michigan Avenue Chicago, Illinois (312) 222-9100

R. Clark Wadlow Sidley Austin Brown & wood 1501 K Street, N.W. Washington, DC 20005 (202) 736-8215 Its Attorney

December 3,2001 TABLE OF CONTENTS

&gg

I . SUMMARY AND INTRODUCTION ...... 2 I1 . THE RULE IS GROUNDED IN PERCEPTION, NOT FACT ...... 6 III . THE FACTS: A DRAMATIC EXPLOSION IN MEDIA OUTLETS SINCE 1975...... 7

A . Tribune’s cross-media markets echo these national trends and illustrate why repeal of the Rule would be in the public interest ...... 12 I . The New York marketplace...... 12 .. .. a. Television competlhon...... 13 b . Radio competition ...... 14 c . Cable/DBS television.. competition ...... 15 d . Newspaper competition ...... 16 e . Internet ...... 17 2 . The Los Angeles marketplace ...... 18 .. .. a . Television competltlon...... 18 b . Radio competition ...... 19 c . Cable/DBS television.. competition ...... 20 d . Newspaper competition ...... 20 e . Internet ...... 21 3 . The Chicago Marketplace...... 21 .. .. a. Televlsion competltion...... 22 b . Radio competihon ...... 23 c . Cable/DBS television.. competition ...... 24 d . Newspaper competihon ...... 24 e . Internet ...... 25 4 . The South Florida marketplace ...... 25 .. .. a. Telewsion cornpetition...... 26 b . Radio competition ...... 28 c . Cable/DBS television competition...... 28 d . Newspapers ...... 29 e. Internet ...... 29 5 . The Hartformew Haven marketplace ...... 29 .. a . Television competition...... 30 b . Radio competltion ...... 32 c . CablaBS television competition...... 32 d. Newspaper competition ...... 32 e . Internet ...... 33 B . The increase in choices has fragmented the marketplace. Market shares for all media have dropped. As a result. no one voice. and no small number of voices. reach more than a fraction of the market, let alone dominate it ...... 33 1 . Ratings for individual broadcast television stations decline...... 33 2 . Share for individual radio stations declines...... 34 3 . Number and circulation of daily newspapers decline...... 35 4 . Emergence of a true viewpoint gatekeeper ...... 35 C . The cost of newsgathering has increased dramatically for all media, and the cost of other programming has greatly affected independent stations ...... 36 IV . M A FRAGMENTED WORLD, THE RULE HARMS DIVERSITY...... 37 A . The Rule is unnecessary...... 38 1. The challenge for any media company competing in the American marketplace today is not about dominating the local market . The challenge is to be heard at all ...... 38 2 . The market - not proscriptive regulation - is the best guarantor of viewpomt.. diversity ...... 40 3 . Tribune’s newspapers and television stations reach different demographics...... 41 4 . Common ownership does not mean common viewpoints...... 42 B . The Rule actually harms diversity by reducing local news and public interest programming ...... 44 1. The Rule denies ownership of broadcast stations by the organizations most capable of, and dedicated to, covering local news ...... 44 2 . The rule discourages new voices in the marketplace...... 49 3 . We harm the fabric of our cities if we deny newspapers the right and ability to deliver news in alternative media ...... 53 V . JOINT VENTURES ARENO SUBSTITUTE FORCOMMON OWNERSHIP ...... 55 A . Lack of capital investment...... 55 B . Lack of human-resource investment and coordination...... 56 C . Cross-media journalism requires common goals and incentives...... 58 VI . THE RULE IS UNCONSTITUTIONAL...... 58 A . The deferential standard of review originally applied to the Rule was based on the assumption there was scarcity in the local media marketplace...... 59 B . The Commission has recognized scarcity no longer exists as it has eliminated other structural rules ...... 60 1. Reconsideration ofthe Fairness Dochine...... 61 2. Other Broadcast Ownership Rules ...... 61

-2- 3 . 1984 Television Deregulation Order ...... 63 4. Repeal of the Rules Designed to Curb the Power of Broadcast Nehvorks.64 C . The Rule does not withstand even intermediate Constitutional scrutiny...... 65 D . The Rule discriminates against newspapers by singling them out as the sole media outlet subject to blanket and complete restrictions...... 68 E . The 1996 Act Creates a Presumption in Favor of Deregulation...... 69 VI1. THE PUBLIC INTEREST IS BEST SERVED BY REPEAL OF THE RULE ...... 72

CONCLUSION ...... 17

-3- Before the Federal Communications Commission Washington, D.C. 20554

) In the Matter of 1 Cross-Ownership of Broadcast Stations ) MM Docket No. 01-235 And Newspapers 1 ) MM Docket No. 96-197 NewspaperlRadio Cross-Ownership ) Waiver Policy. 1

COMMENTS OF TRIBUNE COMPANY

Tribune Company ("Tribune."), the corporate parent of 23 major market television stations, four radio stations and eleven daily newspapers, hereby files the following Comments in response to the Notice of Proposed Rule Making ('Notice") issued by the Federal Communications

Commission ("FCC" or "Commission") reviewing, inter alia, the daily newspaper-broadcast common ownership rule (the 'Rule" or the 'newspaper cross-ownership rule"), codified at 47 C.F.R. 5 73.3555(d)(2000).'

' Tribune. through subsidiaries, owm and opera- the following television stations: WPIX, Channel 11. New York: KTLA. Channel 5. Lor Angela: WGN-TV. Chvlnel9, Chicago: WPHL-TV. Channel 17. Philadelphia: WLVI-TV, Channel 56. Cambridge. Massachuseru; KDAF. Channel 33, Dallas: WBDC-TV. Channel 50. Washington. D.C.: KSWB-TV. Channel 69. San Diego; WATL. Channel 36. Atlanta: KHWB, Channel 39. Houston: KCPQ, Channel 13. Tacoma. Washington: KTWB-TV, Channel 22. Seatlle: WBZL. Channel 39. Miami; KWGN-TV. Channel 2. Denver; KTXL. Channel 40. Sacramento. California; WXM. Channel 59. Ind~lupliE:WTIC-TV. Channel 61. Hanford, Connecticut; WTXX Cham1 20. WaterbuIy,~CoMacticut:WXMI, Channel 17. Grand Rapids. Michigan; WGNO. Channel 26. New Orleans: WNOL-TV. Channel 38. New Orleans: WPMT. Channcl43, York. Pennsylvania: WEWB. Channel 45. Schcneclady. New York. Through subsidiaries, Tribune also publishes the following daily newspapers: Los Angeles Tis.Los Angelcp; The Chicugo Tribune. Chicago; Newsday. New York; The Balrimorc Sun, Baltimore; The Hanford Courant. Hanford. Connecticut: The Soufh Florida SunScnrinel. South Florida: 7he OrWoSentinel. Orlando. Florida: The Daily Fress, Newport News, Virginia: 7he Morning Call. Allentown. Pennsylvania; The Adwcure. Stamford. Cornticut: Greenwich Timmc. Greenwich. Connecticut. Tribune alsn owns. through subsidiaries. WGN(AM). Chicago: KEZW(AM). Aurora. Colorado: and KKHK(FM) and KOSI(FM). Denver. See Tribune Company Zoo0 Report. available at wwwu.rribune.com/repanZOM)/tc2WOar19.html. I. SUMMARY AND INTRODUCTION.

Within hours of the September 11 attacks on America, Susan Harrington and Diane

Goldie, reporters for Tribune’s Newsday newspaper, were on the telephone with Tribune television stations providing eyewitness accounts of the tragedy at the World Trade Center. In the days following the attacks, Newsday reporter Edward A. Gargan reported live from Pakistan to New York viewers over Tribune’s WPIX. As stations across the country broadcast common network coverage of the terrorist attacks and their aftermath, WPIX and Tribune’s other television stations used Tribune newspaper reporters to expand the public discourse by providing a local perspective of these historic and tragic days - a perspective produced by people from the local community.

Also on September 11, for the first time in its 154-year history, the Chicago Tribune delivered a special afternoon edition to the doorsteps of every one of its subscribers in the Chicago area. As the demand for news peaked, the newspaper elected to absorb a cost of more than $167,000 to produce a special edition - with no advertising - to meet the demands of its readers for news and information. In the current economy, as publishers suffer through the worst advertising environment since the Great Depression, such additional cost cannot be justified financially. It is justifiable only by a newspaper’s commitment to its community and to delivering the news.

The news coverage of the events of September 11 and of the war on terrorism demonstrate how the media marketplace has changed dramatically since adoption of the newspaperhroadcast crossownership Rule in 1975. Never before has the American public had access to such a wide array of choices among sources of information. In 1975, the local media marketplace

was a handfil of shops in the village square: a few television stations, perhaps a dozen radio stations,

and a daily newspaper or two. Today’s marketplace is the modem megamall. a smorgasbord of

television and radio stations. cable channels and Internet sites offering all manner of news, views and

entertainment programming for targeted audiences and cultures; instantaneous access to local and

distant newspapers, magazines, encyclopedias, and Internet-only news services on the World Wide

-2- Web: scores of national, international and local program services available over multichannel video program distributors such as cable and DBS;local daily and weekly newspapers, and a choice of national newspapers.

When it adopted the Rule in 1975, the Commission found newspaper publishers had a long record of public service and had provided more news and public affairs programming than other licensees. It had no evidence of actual harm from cross-ownership. Nonetheless, the Commission adopted the Rule in the hope it would foster some gain in diversity. The Supreme Court later predicted, correctly, that technological advances could obviate any perceived need for the Rule.'

Today, the market underscores the prescience of the Supreme Court's prediction. Never before has the media marketplace been so fragmented and so clearly incapable of domination. And never before have the providers of news and information had such need to be free of outmoded and unnecessary restrictions in order to be heard and to remain viable. As the media marketplace has fragmented, the ratings of individual broadcast stations and the circulation of individual newspapers have declined. At the same time, the costs of gathering news and of procuring programming have risen exponentially. This has put great pressure on news providers to maximize the use of their resources or reduce the scope of their coverage.

Tribune has 77 years of experience operating newspapers and over-the-air broadcast stations in Chicago? These Comments focus on the five markets where Tribune has such combinations today: New York, Los Angela, Chicago, South Florida, and Hartford.' Each has had an explosion in

FCC v. Learmc of WornVoters. 468 US. 364.316 n.1 I (1984). The Supreme Cow acknowledged it might need to reconsider rule5 premised on the scarcity docvine upon "mme Signal fmm Congress or he FCC hat technological developments have advanced IO far that same revision of the syslem of broadcast regulation may be required." 3 The QIicago Tribune is in its 155' year of publication: WGN(Ah3) went on the air in 1924: WGN-TV first broadcast in 1948.

' Tribune's cmss-ownerohip in Chicago (Chicago Tribune and WGN-TV). has been grandfathered under the Rule since irr adoption. Tribune's cross-ownership in South Florida (Sourh Florida Sun-Scnrinel and WBZL) is pursuant IO a temporary waiver pending the outcome of this proceeding. See 1998 Biennial ReeulatotV Review, IS FCC Rcd. IIOS8, I1109 (2M)o). In

-3- television and radio stations, cable systems and other MVPDs. and national and locally tailored Internet sites since 1975. Each has fierce competition among publishers of daily and weekly local newspapers.

This competitive marketplace, not the Rule, is the best guarantor of diversity.

Tribune’s experience illustrates how cross-ownership aCtuaUy increases the amount, quality and viewpoint diversity of local news and public affairs programming, and how common ownership is an asset not only to media companies but also to the public.

Tribune’s experience also illustrates how the Rule is unnecessary and. worse, how it acntally harms diversity. The Rule denies broadcast ownership to local newspapers, the entities which are the most dedicated to providing local news. Moreover, the Rule ignores the significant entry barriers that make launching a new local newscast impractical for most over-the-air stations. Tribune’s experience in South Florida illustrates how the Rule discourages new voices: the temporary waiver allowing Tribune to purchase WBZL(TV), Miami, was conditioned on the station being held entirely separate from Tribune’s Sun-Sentinel newspaper, published in Ft. Lauderdale, Florida. As a result, instead of creating a new voice, WBZL carries a news program produced by mother television station in the market.

Joint ventures are not the answer. While they are permitted under the Rule, they seldom. if ever, realize the full potential of mmmon ownership. The reality is that a joint venture never has the same commitment to capital and human resources as a wholly owned combination.

Given the realities of today’s marketplace. the Rule is unconstitutional. The deferential standard of review under which the Rule was previously judged was premised on scarcity in the marketplace.’ Yet the Commission itself has found scarcity no longer relevant, undone by the mainstream adoption of cable as the dominant video delivery system. Indeed, the abundance of choices

New York (Newday and WPIX). Los Angelcs (Ins Angcles Times and KTLA). and Hanford (neHanford Couranr. WTXX and WTIC-TV).Tribune acquired the ncwippers in lune of ZOCO and is expressly permitted. under applicable Commission policy. to hold those crowownerships until the next station license renewal dales. Amendment of Section 73.34. 73.240 and

-4- in the media marketplace has led the Commission to curtail so many other ownership restrictions that the Rule now impermissibly discriminates against newspapers - which, ironically, are entitled to the highest degree of First Amendment freedom. As demonstrated in the recent invalidation of the cable ownership limits, the courts provide a viable remedy if. through this proceeding. the Commission

refuses to unlock the time capsule that has preserved the Rule for the past 26 years.

Finally, repeal of the Rule would serve the public interest better than any of the other

options proffered by the Commission. Standards based on market concentration or voice counts, a

“structural separation” requirement, or a liberalized waiver policy all suffer from a number of legal,

administrative and constitutional flaws. Most notably, they would all necessitate increased Commission

activity as a regulator of newspapers - an area not within its jurisdiction.

Until now, the Commission has been unable’ or unwilling to extend its recognition of

the new media landscape to allow broadcasters and publishers to combine. Given today’s marketplace,

the Commission should allow broadcasters to pursue the same programming efficiencies with news-

committed newspaper publishers that it allows to occur within the broadcasting and cable industries.

Failure to level the playing field so newspapers can compete with vertically and horizontally aligned

broadcasters and cable operators will jeopardize the production of the news, children’s, and public

affairs programming the Commission has recognized serves the public interest.

Accordingly, the Commission should repeal the Rule.

73 636 of he Commiulon’n Ruks Relaunp to Mulriolc Ownershm of Standard M and Television Broadcanr SUtlonS. 50 FCC. 2d IC46 at n 25 (1975) (‘w).

From 1987 until 1996. Congress precluded Ihe review of the Ruls by prohibiting the Commission from using ils funding IO address any review. The unusual appropriations rertricfion inlentionally shackled the Commission and forced if 10 continue the ban on newspaper publishers owning local television stations. regardless of whether he ban was necessary or justifiable. See. Pub. L. NO. 1oO-IU2. 101 Star. 1329 (Dec. 22. 1987).

-5- 11. THE RULE IS GROUNDED IN PERCEFTION. NOT FACT.

As the Commission considers the first revision to the Rule since its adoption 26 years ago, it is appropriate to begin by considering the fragile rationale used to bring the Rule into being in

1975. The Commission has often stated its laudable goals of enhancing viewpoint diversity, economic competition and quality programming services.6 In adopting the Rule, the Commission sought to further these goals in much the same manner it did when it adopted bans against ownership of multiple radio stations and radio/television combinations in a single market.

However, the evidence obtained during the public rulemaking process provided little, if any. support for the Rule. Instead, the evidence showed broadcast stations owned by newspaper publishers had a “long record of service” in the public interest and produced a larger percentage of news, public affairs and other public service programming than did independently-owned stations.’ The

Commission also found newspaper owners should be credited for their pioneering efforts to launch both radio and television broadcasting.’ Most importantly, the Commission did not find newspaper-broadcast combinations spoke with one voice. nor did it find such combinations were harmful to competition. In fact, the Commission expressly stated it found no pattern of abuse in existing cross-owned markets.’

&&I. 50 FCC zd at 1074. The Commission stated the twin goals in adopting multiple ownership ruks were to enhance viewpoint diversity and economic competition. Later the Commission prioritized these goals and identified a third interest, stating that ewnomic competition must sometimes yield to ‘the even higher goals of diversity and the delivery of quality broadcasting service to the Amerkan public.” &. Cross-Ownershio of Broadcast Stations and Newsoavers, MM Docket No. 01-295 at 1 14 (2001). (” m”)(‘the Commission adopted rhe ncwspaprlbroadcast cross-owncrship rule largely LO promote and protect a diversity of viewpoints.”). Id at 140 (diversity of viewpints in local news presentation is at rhe karI of the Commission’s diversity goal).

’-at 1078 (1 109)

-ai 1074.

’ FCC v. National Citizens Cornrn. for Broad.. 436 US. 775. 786 (1978).

-6- These conclusions are not surprising, and are in fact consistent with the Commission’s similar findings in its 1941 investigation of broadcastinghewspaper cross-ownership issues.” What is surprising is the Commission’s reaction to the vacuum of evidence it had in 1975: Despite the absence of any showing that commonly-owned media engaged in viewpoint constriction or anticompetitive practices, the Commission concluded that “even a small gain in diversity” justified adoption of the

Rule.” In effect, the Commission decided to play a hunch that diversity would be enhanced, possibly by only the smallest of margins, by adopting the Rule.

The wisdom of adopting a sweeping proscription for such a speculative and incremental advance is now belied by a quarter-century of experience. What is most striking, however, is the unintended harm the Rule has wrought on the public interest principles it was adopted to protect.

Tribune’s experience in the past 26 years illustrates how the Rule weakens viewpoint diversity, reduces the quality of public interest programming and jeopardizes competition. The following sections highlight the vast number of media choices now available to the public. with special emphasis on media markets where Tribune omboth a newspaper and a television station. In doing so, they illustrate the choices available to consumers and the reality that diversity is enhanced by freeing newspapers to add their voice to the din of cur nation’s broadcast media marketplace. 111. THE FACTS A DRAMATIC EXPLOSION IN MEDIA OUTLETS SINCE 1975.

As the Commission acknowledged in the Notice, the explosion of media voices since the Rule was adopted in 1975 has been deafening. The number of radio and television stations serving

Io In March. 1941. the Commission opened a rulemaking intended Io cunail radio ownership by newspaper publishers. Freauencv Broadcast Stations M,6 Fcd. Reg. 1580 (Notice of Investigation and Hearings March 21. 1941). The FCC conducted hearings for more than a year, including sending investigators into communities to look for news bias on the pan of commonly-owned propenies. A similar s~dywas independently conducted under the auspices of Columbia University. The only problem either study fwnd was that in some small towns. newspapers that owned radio stawns nfuxd 10 print the program schedules of rival stations. Ultimately, the Commission closed the investigation without adopting any cross-owwrship Nle.

” at 1076. 1080 n. 30.

-7- the public has increased dramatically in the intervening years and new media have emerged to add to the number of programming choices available. The only medium that has not experienced a quantitative expansion is daily newspapers, which have declined in number since 1975 and suffered circulation and readership losses as well.

In 1975, there were 953 full power over-the-air television stations in the U.S. As of

June, 2001, there were 1,678 full power stations and 2.3% low power stations.” There were 7.785 radio stations on the air in 1975 - 4,432 AM stations and 3.353 FM stations” - and FM radio was just gaining a toehold among the listening public. Today, there are 12,932 radio stations on the air, including 4,716 AM stations and 8,216 FM stations.14Of the 286 Arbitron markets in the U.S. today,

85% are served by 10 or more stations and 43% by 20 or more.’J

The source of the greatest increase in programming options, however, is a medium that was in its infancy in 1975, cable television. For a mjority of Americans. turning on the television each day opens the door to scores of cable networks and other programming selected by cable operators. In fact, the majority of Americans watch television via cable - not over the airwaves. The Commission acknowledged this fact when it noted, “cable service is generally available to households throughout the

U.S.”I6In 1975, there were 3,506 cable systems in the U.S. with 9.8 million subscribers.” Today. some 10,466 cable systems afford nearly 70 million households access to more than 231 cable

‘I FCC. Brdcmr Starion Torub (July 13, 2001). available at www.fcc.gov.mmb/asd/rolrlsm1010630.hrml.

” Broadcmting & cnblr Yeartook 2WI. at D-733,

“ NalioMl Axxiation of Broadcartns. Rudk Fmr Facrs, available at www.Mb.org/radio/radfacts.asp. &. Broldcmring & Cab& Yearbock 2W1, D-733 (citing 1/1/01numbers of 12.717 radio slatiom, 4.685 AM and 8.032 rm).

” Brwdcmring & Cable Yearbook 2WI. at D-719 - D-726 (243 markets with IO or mort slaliom. I24 markets with 20 Or more).

l6 Review of the Comrnisrion’s Reaulations Governing Television Broadcasting. 14 FCC Rcd. 12903, 12953 (7 113) (1999) (‘Television Ownership Reoort and Order”).

” National Cable Telecommunicaions Associalion (“CTA”). Industry Overview (2001) available at

-8- networks.” Cable penetration in the U.S. is currently 68% and cable is available to 96.7% of U.S. television ho~eholds.’~

Other multichannel video program distributors (“MWDs”)have arrived and are adding still more choices for consumers: Direct broadcast satellite (‘DEB”).satellite master antenna television

(“SMATV”).C -Band satellite dishes, and multichannel, multipoint distribution service (‘MMDS”) were all virmally nonexistent in 1975. Today, they deliver video programming to about 16.9% of U.S. television households.” DBS serves more than 15.5 million subscribers, SMATV has 1.5 million subscribers. C-Band serves more than 1.1 million, and MMDS serves 700,000 subscribers.“

Combining MVPD with cable, 85% of all U.S. television households use something other than over- the-air television for their video programming reception.= Satellite radio is also being rolled out across the country, offering hundreds more choices for news, entertainment and information, and will bring a wide variety of choices to even the smallest towns and most remote pans of the nation.=

Driving the rapid acceleration of cable and DBS subscriptions are the advantages of an enhanced picture and, more importantly, an almost endless array of programming choices. The entertainment optiom are well documented.u AOLiTime Warner’s TBS Superstation reaches 86.1

www.ncla.com/rndu~~~ove~iew~rnds~~.c~?sla~=4.ah.hnp://usen.s~et.be/s~9l776/cable~~cablehisus2.h~.

‘IIndlrrny Overview, available at www.ncla.comlpdf_filesllnd_ovnu_06080l.pdf. a1 14 l9 Id.

Number of MVPD users divided by all US. television households. Slatistics from NCTA. Indvrny Overvuw.

” NCTA. lndytry Overview, at 11

While a few households may have both cable and some form of MVPD, it is presumcd such hwseholds are relatively few.

I’ a,%. Hugh Panero. chief executive of XM Satellite Radio. which began offering ils services to customers this year: ‘We intend to do on radio what cable and direct salellite brwadcasting did for TV. We plan to offer more choice and SWlity in programming from coast to coast.“ Howard Wolinsky. Radio Fi~/bDials up High Tech, Chi. Sun-Times. Nov. 12. 2M)1. at 55.

I‘ Cable and DBS providers anempt to distinguish lhernselves Lhrough marketing campaigns that describe the nearly endless

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